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Franchising: Strong Local Partners in a Global Business

The franchise market in the Middle East is booming. This is particularly true for the Gulf Region where favorable demographics, a multi-ethnic population and high disposable incomes account for an attractive environment for many foodservice operators looking to expand internationally. One of the crucial factors of success is finding the right local partner who provides the necessary business connections and experience in the region. An overview by Bettina Quabius.
Franchising has been a business model in the Middle East since the 1960s when several American and French brands started building their presence in the region. From the very beginning, local cashrich companies, interested in expanding their business portfolio across new sectors and foreseeing the great potentials of importing international brands into the region, served as ideal partners for the global companies. Today, the foodservice market still is dominated by relatively few major local firms, operating a large number of brands, usually in several different countries in the region. Companies like Americana Group and MH Alshaya Group in Kuwait, Olayan Group, Savola Group, and Al Jammaz Group in Saudi Arabia, or Emirates Leisure Retail in the United Arab Emirates not only offer enormous advantages in procurement, pricing and distribution, but also a wealth of experience for companies who want to break into new markets.

Kuwait has over the years evolved as particularly franchise-friendly and is home to nearly all international foodservice brands. With a population of just three million residents, the country offers a perfect test market which is why many companies choose Kuwait for the launch of their first franchise location in the region.
For half a century the Kuwait Food Company – Americana Group – has been a leading franchisee for quickservice, casual, and fine dining restaurants in the Middle East, North Africa and Central Asia regions. In 2013, Americana reported a turnover of €2.25 bn and €130 m in profits. Founded in 1964, the company was the first to introduce an international quickservice restaurant chain in the Middle East by opening a Wimpy outlet in Kuwait City back in 1970. Today, Americana is the primary franchisee in the Middle East for chains such as KFC, Pizza Hut, Hardee’s, TGI Friday’s, Krispy Kreme, Costa Coffee, and Signor Sassi. The group also operates six homegrown brands, including Chicken Tikka, Fish Market, Samadi, Maestro, and Fusion. Americana’s growing network of 1,460 outlets is spread from Morocco over Saudi Arabia to Kazakhstan and Iraq, operating in over 13 countries and 98 cities. With its fast-growing range of more than 1,000 products Americana also leads the way in consumer packaged goods, many of them have become household names and category leaders in the MENA region. Brands include frozen foods, snacks, canned food, dairy products, and bottled water.
Read more about franchising in the Middle East in the full article.

| 22 August 2014 |
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